The Impact of public health expenditure on economic growth in Zimbabwe

Author

Chisangowerota, Ruth R.

Title

The Impact of public health expenditure on economic growth in Zimbabwe

Abstract

This study investigates the impact of public health expenditure on economic growth in Zimbabwe using yearly time series data from 1990 to 2020. Good health is a very important role in economic growth. It develops high worker’s effectiveness and productivity as there will be reduced sick days at work, high intellectual sense hence increased physical and mental abilities which then lead to increased production as a result improved economic growth. The study was explained by the Vector Error Correlation Model (VECM) using time series data to show the impact of public health expenditure, inflation, foreign health aid and public education expenditure as they affect economic growth in Zimbabwe. The financial commitment to health investment and expenditure affects economic growth and development therefore, the study recommends that government should put more effort in increasing its yearly budgetary allocations to the health sector in order to have a strong improvement on health outcomes in Zimbabwe. The Zimbabwean government should try its best to meet the WHO recommendations of increasing the allocation to 15% and guarantee policies that will produce efficient results and good cooperate governance to the health sector making sure that funds are correctly spent. In Zimbabwe the average budgetary allocation to the health sector is 2.4% which is lesser than the WHO recommendations. If the budgetary allocation in Zimbabwe increased, it will make government health expenditure to have a robust effect to the economy. For instance, if the economy can become wealthier over a rise in national income, government expenditure on health should do the same.
There is a great need to commend a model which boosts public health expenditure (PHE) in Zimbabwe. The government should consider health as a back bone of the economy. There is great need for the government to increase its budget allocations towards public health care expenditure. Health investment has both negative and positive effects to the economy. A healthy population means a healthier economy as there will be a rise in life expectancy, a healthier population, healthy educated children, more hours at work hence more production leading to increased output which at the end is increased growth. Babatude (2012) postulates that, better health facilitates a sound ability for workers and enterprises which as a result improve the tax base of an economy thus a better fiscal base hence better economic performance leading to poverty reduction. There is a great need for more investment in health and in Zimbabwe. Sufficient investment in the sector will increase educational outcome and also economic growth.
This research also revealed a positive relationship between public health expenditure and economic growth. To achieve per capita GDP growth in Zimbabwe there is need to increase savings so as to raise sufficient capital. There is low capital formation Zimbabwe which results in shortage of capital due to the fact that there are low savings done. Thus, increasing savings could make sufficient capital available to investors. Increasing savings could be done by increasing institute deposit insurance to safeguard depositors. This will act as an incentive for depositors to save in banks hence adequate capital can be raised which can be channeled to investors to increase their production as a result increased economic growth. Investment in agriculture and industry could be growth enhancing. When this is done it would complement with domestic investment hence accelerate economic growth. The government should increase remuneration of nurses so that they provide health care to the public. In addition, the government should subsidies for research and development in Zimbabwe.

Date

November 2021

Publisher

BUSE

Keywords

Public health expenditure

Time series data

GDP

Supervisor

Dr. S. Mukoka